Bringing services offered bylife insurance cos under service tax regime would result in higher premium for products barring term plans as stiffs are likely to pass on the additional cost to buyersThe cost of life insurance and healthcare may go up with Budget 2011 bringing services offered by hospitals andlife insurance companies under the service tax system.The move is expected to result in a higher premium for all kinds of insurance products barring term plans?including products such as donation and pension plans?as the companies are likely to pass on the additional cost to buyers.”There is a service tax on traditional policies even now on the risk cover. Currently, it is at 1%. However, according to the Budget proposal, this service tax will increase to 1.5% as is the case of Ulips (unit-linked insurance products),” said Rajesh Sud, managing director and chie employment laws uk f executive, Max New York Life Insurance Co. Ltd. “It will be levied on the entire premium in case of traditional policies.”Sud said the move went against the general expectation that finance minister Pranab Mukherjee will provide more tax incentives to promote long-term savings and insurance.Kartik Jhaveri, founder and director, Transcend Consulting, a private financial planning and wealth management firm, also said the move was unexpected.”Insurance companies are likely to pass at least a part of the lumber on to consumers,” Jhaveri said. “The move may also prove advantageous to mutual fund companies.”P. Nandagopal, managing director and chief executive at IndiaFirst Life Insurance Co. Pvt. Ltd, said the impact of the proposed changes would likely be marginal.”The tax will not be levied on the entire premium and hence, the impact will be less,” Nandagopal said.